Interim Results
BowLeven Plc
22 March 2007
22 March 2007
BowLeven Plc ('BowLeven' or 'the Company')
Interim results for the six months to 31 December 2006
BowLeven, the African focused oil & gas company listed on AIM, today announces
its interim results for the six months ended 31 December 2006
Highlights include:
•Announced and completed a successful takeover of First Africa Oil plc.
•Equity fundraisings of a total of £67 million net of expenses, including
a £56 million placing in December 2006.
•Commenced a potentially high impact drilling programme.
•Successfully flow tested the first well as an appraisal of the E field at
30 mmcfd of gas and 3,800 bpd of condensate.
•Strengthened its Board and technical team composition.
•Commenced discussions regarding the possible future sale of gas and
liquids from the Etinde permit in Cameroon.
•Net cash of £89 million.
Commenting, Kevin Hart, BowLeven's CEO, said:
'I'm delighted with the progress we are making on numerous fronts at BowLeven.
The high calibre team we are assembling has already helped increase the value of
our acreage, and has begun to identify further attractive opportunities which
have the potential to create shareholder value.'
ENQUIRIES
For further information contact:
BowLeven plc +44 (0)131 260 5100
Kevin Hart, Chief Executive Officer
Maitland +44 (0)20 7379 5151
Neil Bennett
Alastair Crabbe
Liz Morley
Chairman's Statement
Dear Shareholder,
As this is my first official communique may I start by expressing a very warm
welcome to each of you. I genuinely believe I have joined BowLeven at a very
exiting time in its evolution as the team strives to develop a business which
can consistently deliver organic growth and value creation for its shareholders.
In this regard, the last six months have heralded a period of significant
positive change and activity for BowLeven. During this period the Company has:
•Announced and completed a successful takeover of First Africa Oil plc.
•Equity fundraisings of a total of £67 million net of expenses, including
a £56 million placing in December 2006.
•Commenced a potentially high impact drilling programme.
•Successfully flow tested the first well as an appraisal of the E field at
30 mmscfd of gas and 3,800 bpd of condensate.
•Strengthened its Board and technical team composition.
•Commenced discussions regarding the possible sale of gas and liquids from
the Etinde permit in Cameroon.
Vision and Strategy
It is our vision to build an African focused, exploration and production company
which becomes renowned for its ability to consistently create and realise
material shareholder value through exploration led organic growth and niche
acquisitions.
Operations
Cameroon
Over the past few years the Company has built up an extensive database of 2D and
3D seismic coverage over its Etinde Permit, which comprises Blocks MLHP 5,6 and
7. Ongoing interpretation of the 3D seismic data on Block 7 has resulted in new
opportunities on this acreage coming to light. In particular this work helped
identify the potential for commercial volumes of condensate rich gas in the
region of the IE-1 discovery well, which was first drilled by Total in 1981.
Consequently the first well in the drilling campaign, IE-2, was drilled to
appraise this discovery
As announced earlier this month the IE-2 well successfully tested gas and
condensate from the Isongo formation. The well flowed at a stabilised rate of 30
mmscfd and 3800 bpd through a 60/64 inch choke with a flowing well head pressure
of 2126 psi. The production test indicated excellent reservoir deliverability
with no evident depletion. Whilst further evaluation is required to determine
the extent of the E Field and associated reserves the result of the IE-2 well
have been very encouraging, especially as the flow rates were constrained by the
test equipment. The well also encountered 50 feet of net pay in good quality gas
bearing sandstone in the Biafra formation. The IE -2 well has been suspended as
a possible future producer.
A substantial amount of technical work has been carried out and is still ongoing
to evaluate the recently acquired 3D seismic data over Blocks 5 and 6 in the
sparsely explored Douala Basin. Whilst still at a relatively early stage, the
interpretation of this data has already generated a number of leads and
prospects. One such prospect ('D') located in Block 5 is the target for the
second well in the current drilling campaign. The Adriatic VI drilling rig has
now been moved a short distance to Block 5 of the Etinde Permit to begin
drilling the higher risk 'D' exploration prospect. This well was spudded on 21
March 2007 with the primary objective of exploring the Upper Miocene channelised
turbidite sands, which are believed to be similar to those that were found by
Noble Energy to be hydrocarbon bearing 10km downslope in the O-1 Belinda
discovery in Equatorial Guinea..
Following this second well it is likely that the rig will return to Block 7 and
drill an exploration prospect which is located up dip from the adjacent E Field.
The decision on where, and if, to drill a fourth well in this campaign is still
being evaluated. This will depend, in part, on the results of the prior wells
and the status of our extensive ongoing review of the recently acquired seismic
data in both Cameroon and Gabon.
A key objective for the Company in the next 12 -18 months is to seek to monetise
our existing resource base in Block 7 in Cameroon together with any additional
gas/liquids discovered in Blocks 5&6. Of particular encouragement is the
Cameroon Government's announcement in early 2007 of a cooperation agreement with
the Government of Equatorial Guinea to investigate the possibilities of a
project to export gas from Cameroon to the gas liquefaction plant on Bioko
Island. It is proposed that Limbe in Cameroon would be the gathering hub for any
such scheme. The close proximity (approximately 27 km) of the Company's resource
base to Limbe combined with the high well deliverability and liquids content
experienced at IE-2 should help ensure that Bowleven is ideally positioned to
participate in any future gas export project.
Gabon
The purchase of FirstAfrica Oil plc ('FirstAfrica') (mentioned below) has given
us both a significant development opportunity and substantial exploration
acreage. We have been busy on our newly acquired Gabonese operations. Having
reviewed FirstAfrica's plans we have changed the approach to production of the
offshore EOV field. Good progress has been made on preparing an amended field
development plan for the EOV which would involve evacuating the oil through a
pipeline to nearby existing onshore facilities. This should allow the oil to be
produced at lower operational costs than for the previously proposed development
scheme based on an FPSO. First oil is targeted for 2H 2008.
Work has also now commenced on reprocessing the vintage 2D seismic over the
onshore Epaemeno Block. This work will be completed by mid year and the new
dataset will form the basis for future drilling plans.
Corporate
I mentioned earlier that FirstAfrica now forms part of the BowLeven Group. We
are very happy to have completed this meaningful acquisition. There is a clear
logic in combining the asset portfolios of the two companies and using our
existing financial resources and experience of the management team to develop
the various projects that are available. FirstAfrica has a 100% equity interest
in both the East Orovinyare ('EOV') offshore block in Gabon, which contains an
existing oil discovery that we are seeking to develop, and the Epaemeno Block
which is 1,340 km2 of exploration acreage in onshore Gabon which sits next to a
number of recent discoveries in surrounding blocks.
Following on from the net £11 million placing in July 2006, the Company's
finances were further significantly strengthened by the successful placing of
26.4 million shares at 220 pence a share on 19 December 2006 to raise
approximately £56 million net of expenses. These funds will be used to help
finance the development of the EOV field and to provide funds for exploration
activities and working capital purposes.
Fostering strong external partnerships with the right risk reward profile is a
sound strategy for helping develop our assets. Accordingly, we continue to
consider our needs and opportunities for timing on farm-outs.
Financial Results
As yet we have no operating income. Against this background, the Group reported
a loss of £2.1 million for the six months ended 31st December 2006. The main
contributor to this loss was administrative expenses of £3.1 million reflecting
the Group's efforts to develop its assets. This was also the first period that
the Company had applied FRS20, which requires all companies to recognise the
fair value of employee share based benefits in the financial statements. This
resulted in a charge of £0.3 million for the six months ended 31 December 2006
which has been included within administrative expenses. Also included within
administrative expenses was an amount of £1.1 million primarily relating to
various translation differences on foreign exchange transactions that have been
charged to the income statement. This partly occurred as a consequence of the
Company managing currency exposures by, to the extent practical, matching
receipts and payments in the same currency.
The balance sheet is healthy, with net cash of £89 million at the period end.
Long Term Incentive Plan ('LTIP')
A LTIP was approved by Shareholder's at an EGM of the Company held on 6 December
2006. The plan seeks to help align the remuneration of senior management with
the underlying long term performance of the business.
Board Changes
This has been a period of quite a few Board changes.
I am delighted that Kevin Hart has joined the Company as Chief Executive
Officer. His combination of skills, enthusiasm determination and leadership will
prove to be a key appointment for the organisation.
As well as being appointed Non Executive Chairman myself following the AGM on 6
December 2006, I was also joined on the Board at that date by Caroline Cook as a
Non Executive Director. She has considerable experience in the oil and gas
sector and I welcome her to the Company and look forward to her valuable
contributions.
I would like to register my thanks to Terry Heneaghan and Easton Wren who
stepped down as Executive Chairman and Non Executive Director respectively at
the AGM in 2006. Both gentlemen deserve much credit for their efforts in helping
secure the position that BowLeven is in today.
I am very sorry to report the death of Jerry Anthony, our Exploration Director.
He died just before the end of 2006 after a short illness. He was a much
respected and admired colleague and will be greatly missed.
It is our intention to make further appointments to the Board and management
team as the business develops.
Outlook
Our business is of course one of potentially high risk and high reward. Our
approach is to recruit and maintain a very high calibre and motivated team, to
be highly professional in assessing and managing the risks and rewards in our
operations - such that our prospects are maximised.
The outlook is positive for your Company. I believe that we have the management
team and asset base that can provide us with significant opportunities for
success in creating value for shareholders.
Yours sincerely
R G Hanna
Chairman
22nd March 2007
GROUP PROFIT AND LOSS ACCOUNT
Six months Six months
ended ended Year ended
31 December 31 December 30 June
2006 2005 2006
Unaudited) (Unaudited) (Audited)
£'000 £'000 £'000
Turnover - - -
---------- ---------- ----------
Administrative expenses (3,058) (1,554) (3,674)
---------- ---------- ----------
Operating loss (3,058) (1,554) (3,674)
Interest receivable and similar income 972 746 1,687
Interest payable and similar charges - - (2)
---------- ---------- ----------
Loss on ordinary activities before
taxation (2,086) (808) (1,744)
Taxation - - -
---------- ---------- ----------
Loss for financial period (2,086) (808) (1,989)
---------- ---------- ----------
There are no recognised gains or losses other than those included in the profit
and loss account.
GROUP BALANCE SHEET
At 31 December At 31 December At 30 June
2006 2005 2006
(Unaudited) (Unaudited) (Audited)
£'000 £'000 £'000
Fixed assets
Intangible assets 49,218 27,496 40,953
Tangible assets 386 356 381
----------- ----------- ----------
49,604 27,852 41,334
Current assets
Stocks 4,199 841 810
Debtors 11,041 956 435
Cash at bank 88,750 62,355 42,453
----------- ----------- ----------
103,990 64,152 43,698
Creditors: amounts falling due
within one year (4,328) (6,955) (1,003)
Net current assets 99,662 57,197 42,695
----------- ----------- ----------
Total assets less current liabilities 149,266 85,049 84,029
----------- ----------- ----------
Capital and reserves
Called up equity share capital 6,041 2,961 2,961
Share premium 149,969 86,002 86,002
Other reserves 3,494 3,057 3,218
Profit and loss account (10,238) (6,971) (8,152)
----------- ----------- ----------
Shareholders' funds 149,266 85,049 84,029
----------- ----------- ----------
GROUP CASH FLOW STATEMENT
Six months Six months Year
ended ended ended
31 December 31 December 30 June
2006 2005 2006
(Unaudited) (Unaudited) (Audited)
£'000 £'000 £'000
Net cash flow from operating activities (16,412) (2,301) (3,411)
Returns on investments and servicing
of finance 971 744 1,685
Capital expenditure and financial
investment (5,258) (9,700) (29,433)
----------- ----------- ---------
Cash outflow before financing (20,699) (11,257) (31,159)
Financing 66,998 53,094 53,094
Increase in cash in the period 46,297 41,837 21,935
----------- ----------- ---------
Reconciliation of net cash flow to movement in net funds
Increase in cash in period 46,297 41,837 21,935
----------- ----------- ---------
Change in net funds 46,297 41,837 21,935
Opening net funds 42,453 20,518 20,518
----------- ----------- ---------
Closing net funds 88,750 62,355 42,453
----------- ----------- ---------
NOTES FORMING PART OF THE INTERIM RESULTS
1. Basis of preparation
The financial information contained herein does not constitute statutory
accounts within the meaning of Section 240 of the Companies Act 1985. The
unaudited interim financial information has been prepared on the basis of the
accounting policies set out in the Group's accounts for the year ended 30 June
2006 with the exception of the adoption of Financial Reporting Standard 20
'Share Based Payments' ('FRS 20') which was adopted with effect from 1 July
2006. The figures for the year ended 30 June 2006 have been extracted from the
Group accounts as amended for FRS 20 as this requires prior period adjustments
to the published financial statements. Those accounts have been filed with the
Registrar of Companies and contained an unqualified auditor's report. Adoption
of FRS 20 results in an increase in general and administrative expenses as set
out below:
Six months Six months Year
ended ended ended
31 December 31 December 30 June
2006 2005 2006
£'000 £'000 £'000
Value of share options/LTIPs
expensed in period 276 84 245
2. Reconciliation of movement in shareholders' funds
Six months
ended
31 December
2006
£'000
Loss for the period (2,086)
New shares issued 3,080
Premium on new share capital subscribed 63,967
Other reserves movement 276
Opening shareholders' equity funds 84,029
-----------
Closing shareholders' equity funds 149,266
-----------
3. Reconciliation of operating loss to net cash outflow from operating
activities
Six months
ended
31 December
2006
£'000
Operating loss (2,086)
Depreciation 78
Increase in stocks (3,389)
Increase in debtors (10,667)
Decrease in creditors (348)
-----------
Net cash outflow from operating activities (16,412)
-----------
4. Interim report
This document represents the Interim Report and half yearly results of BowLeven
plc. Copies of the Interim Report will be sent to shareholders and can be
obtained, free of charge, from the Company at 68-70 George Street, Edinburgh,
EH2 2LT for a period of one month.
5. Post-balance sheet event - acquisition of FirstAfrica Oil
On 26 January 2007, BowLeven announced that the recommended all share offer made
for the entire issued share capital of FirstAfrica Oil plc had been declared
wholly unconditional. Accordingly, FirstAfrica will now form part of the
BowLeven Group with effect from 26 January 2007.
6. Financial Instrument Commitments
The Group has outstanding forward contracts to manage foreign currencies by
committing to purchase US$3 million per month @ $1.8625 from 1 January 2007 to
30 June 2007.
This information is provided by RNS
The company news service from the London Stock Exchange
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